by Alyssa Oursler | July 19, 2012 12:00 pm
For all the wrong reasons, banks have been making headlines left and right — so much so that it’s hard to keep up. While financial companies don’t exactly have a track record of angelic behavior, things really have started to heat up as we’ve gotten into the summer months.
Starting with the most recent scandals, here’s a quick recap of what Wall Street’s biggest financial firms have been doing wrong recently — and the penalties they’ve faced as a result:
Capital One (NYSE:COF) is being fined by the Consumer Financial Protection Bureau for a laundry list of issues — for pressuring and misleading customers into buying more products when they opened credit card accounts, for failing to put programs in place that would prevent unfair and deceptive practices, and for unfair billing practices. The payout totals around $210 million, including a $25 million penalty paid to the bureau, a $35 million penalty paid to the Office of the Comptroller of the Currency, and the rest refunded to customers.
Goldman Sachs (NYSE:GS) also reached a class settlement with investors who claimed losses on securities backed by risky mortgage loans — costing them a total of $698 million. This is just the most recent of many similar settlements, such as a $315 million deal by Bank of America‘s (NYSE:BAC) Merrill Lynch and a $125 million agreement with Wells Fargo (NYSE:WFC).
Following a yearlong U.S. Senate investigation, allegations have been made against HSBC Holdings (NYSE:HBC), Britain’s largest bank, for money-laundering, terrorist funding and tax evasion — activities that included more than $30 billion in suspect transactions linked to sanctioned companies in Iran, North Korea and Burma. The bank has been fined $1 billion by the U.S., and Head of Compliance David Bagley also has stepped down in wake of the controversy.
When JPMorgan Chase (NYSE:JPM) finally reported its total loss from the London Whale trading fiasco, the figure was much larger than first disclosed: $5.8 billion. The company is looking to grab back two years’ worth of compensation from the now-fired traders who were responsible for the hedging losses.
On the same day, news also broke that French bank Societe Generale (PINK:SCGLY) will be paying out around $11 million to its clients after a Hong Kong regulator found the bank did not properly disclose fees to them. On top of that, it was found that the bank’s wealth-management customers paid a different price for over-the-counter traded products than the bank did.
Barclays PLC (NYSE:BCS) recently made headlines — and controversy — for manipulating the Libor index, which is set by European financiers and used to price the interest rate for hundreds of thousands of loans and other financial instruments.
Barclays is paying a settlement to regulators amounting to $450 million, and Bob Diamond, the CEO of the bank, resigned. Lloyds Banking Group (NYSE:LYG) of England also could have to pay out more than $1.5 billion for its part, while Deutsche Bank (NYSE:DB) struck an agreement to provide evidence about the manipulation in exchange for a lighter fine, which is expected to be around $1 billion.
Wells Fargo also faced a penalty to kick off this sordid summer. It agreed to pay out $432.5 million to settle a lawsuit over predatory lending to minority borrowers, as it had unfairly targeted low-income African-American communities for high-interest and high-fee loans. Many of those then defaulted during the financial crisis.
As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.
Source URL: http://investorplace.com/2012/07/bad-bad-banks-a-spate-of-sinful-behavior/
Short URL: http://investorplace.com/?p=199932
Copyright ©2013 InvestorPlace Media, LLC. All rights reserved. 700 Indian Springs Drive, Lancaster, PA 17601.